Tackle the Test: Multiple-Choice Questions

1. Question

   Which of the following is a characteristic of monopolistic competition?

   A.

   a standardized product

   B.

   many sellers

   C.

   substantial barriers to entry

   D.

   positive long-run profits

   E.

   a perfectly elastic demand curve

   Which of the following is a characteristic of monopolistic competition?

2. Question

   Which of the following results is possible for a monopolistic competitor in the short run?

   
   

   
   

   1. positive economic profit

      
      
   
   

   2. normal profit

      
      
   
   

   3. loss

      
      
   
   

   A.

   I only

   B.

   II only

   C.

   III only

   D.

   I and II only

   E.

   I, II, and III

   Which of the following results is possible for a monopolistic competitor in the short run?

3. Question

   Which of the following results is possible for a monopolistic competitor in the long run?

   
   

   
   

   1. positive economic profit

      
      
   
   

   2. normal profit

      
      
   
   

   3. loss

      
      
   
   

   A.

   I only

   B.

   II only

   C.

   III only

   D.

   I and II only

   E.

   I, II, and III

   Which of the following results is possible for a monopolistic competitor in the long run?

4. Question

   Which of the following best describes a monopolistic competitor’s demand curve?

   A.

   upward-sloping

   B.

   downward-sloping

   C.

   U-shaped

   D.

   horizontal

   E.

   vertical

   Which of the following best describes a monopolistic competitor’s demand curve?

5. Question

   The long-run outcome in a monopolistically competitive industry results in

   A.

   inefficiency because firms earn positive economic profits.

   B.

   efficiency due to excess capacity.

   C.

   inefficiency due to product diversity.

   D.

   efficiency because price exceeds marginal cost.

   E.

   a trade-off between higher average total cost and more product diversity.

   The lon